UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17604
PROVIDENCE AND WORCESTER RAILROAD COMPANY
_________________________________________________________________________
(Exact name of registrant as specified in its charter)
_________________________________________________________________________
Rhode Island 05-0344399
__________________________________________ __________________________________
(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization)
75 Hammond Street, Worcester, Massachusetts 01610
_________________________________ _____________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 755-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.)
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of August 4, 1995, the registrant has 2,053,137 shares of common stock,
par value $.50 per share, outstanding.
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<TABLE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
<CAPTION>
ASSETS JUNE 30, DECEMBER 31,
1995 1994
(UNAUDITED)
____________ ____________
<S> <C> <C>
Current assets:
Cash and equivalents................. $ 532,000 $ 595,000
Accounts receivable, net of allowance
for doubtful accounts of $125,000
(Note 6)........................... 2,270,000 1,791,000
Materials and supplies (Note 6)..... 848,000 663,000
Prepaid expenses and other.......... 115,000 127,000
Deferred income taxes............... 660,000 893,000
____________ ____________
Total current assets.............. 4,425,000 4,069,000
____________ ____________
Properties (Note 6):
Land and land improvements.......... 8,520,000 8,520,000
Deep-water pier project............. 9,493,000 9,091,000
Track structure..................... 43,269,000 42,550,000
Buildings and other structures...... 5,553,000 5,531,000
Equipment........................... 13,997,000 13,393,000
____________ ____________
80,832,000 79,085,000
Less accumulated depreciation....... 22,422,000 21,658,000
____________ ____________
Total properties, net............. 58,410,000 57,427,000
____________ ____________
$62,835,000 $61,496,000
____________ ____________
____________ ____________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Notes payable, bank (Note 6)........ $ 775,000 $ 120,000
Current portion of long-term debt
(Note 6)........................... 644,000 638,000
Accounts payable.................... 3,392,000 2,904,000
Accrued expenses.................... 1,368,000 1,774,000
___________ ___________
Total current liabilities......... 6,179,000 5,436,000
___________ ___________
Long-term debt, less current portion
(Note 6).............................. 10,135,000 10,485,000
___________ ___________
Deferred grant income................. 4,487,000 4,371,000
___________ ___________
Deferred income taxes................. 8,227,000 8,290,000
___________ ___________
Contingencies (Note 5)................
Shareholders' equity (Notes 2 and 4):
Preferred stock, 10% noncumulative,
$50 par; authorized, issued and
outstanding 653 shares............. 33,000 33,000
Common stock, $.50 par; authorized
2,273,436 shares; issued and
outstanding 2,052,378 shares in
1995 and 2,010,061 shares in 1994 1,026,000 1,005,000
Capital in excess of par............ 5,369,000 5,046,000
Retained earnings................... 27,379,000 26,830,000
___________ ___________
Total shareholders' equity........ 33,807,000 32,914,000
___________ ___________
$62,835,000 $61,496,000
___________ ___________
___________ ___________
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
__________________ ____________________
1995 1994 1995 1994
________ ________ _________ ________
<S> <C> <C> <C> <C>
Income:
Operating revenues, freight
and other..................$5,507,000 $5,389,000 $10,136,000$ 9,755,000
Other income (Note 3)...... 144,000 137,000 320,000 267,000
__________ _________ __________ _________
5,651,000 5,526,000 10,456,000 10,022,000
__________ _________ __________ _________
Expenses:
Operating:
Maintenance of way and
structures.................1,005,000 841,000 2,018,000 1,817,000
Maintenance of equipment.. 599,000 530,000 1,145,000 1,049,000
Transportation............ 1,135,000 1,119,000 2,209,000 2,165,000
General................... 1,020,000 1,066,000 2,022,000 1,923,000
Taxes, other than income.. 516,000 492,000 1,048,000 1,007,000
Car hire, net............. 188,000 140,000 357,000 237,000
_________ _________ __________ _________
4,463,000 4,188,000 8,799,000 8,198,000
Interest................... 305,000 330,000 607,000 661,000
_________ _________ __________ _________
4,768,000 4,518,000 9,406,000 8,859,000
_________ _________ __________ _________
Income before income taxes.. 883,000 1,008,000 1,050,000 1,163,000
_________ _________ __________ _________
Income taxes:
Current.................... 197,000 221,000 225,000 270,000
Deferred................... 133,000 155,000 170,000 165,000
_________ ________ _________ ________
330,000 376,000 395,000 435,000
_________ ________ _________ ________
Net income.................. $ 553,000 $ 632,000 $ 655,000 $ 728,000
_________ ________ _________ ________
_________ ________ _________ ________
Earnings per weighted
average common and common
equivalent share
outstanding, (Note 4)...... $ .26 $ .30 $ .31 $ .35
________ ________ _________ ________
________ ________ _________ ________
Dividends per share
(Note 4):
New preferred.............. $ 5.00 $ -0- $ 5.00 $ -0-
________ ________ _________ ________
________ ________ _________ ________
Old preferred.............. $ -0- $ -0- $ -0- $ .05
________ ________ _________ ________
________ ________ _________ ________
Common..................... $ .05 $ .05 $ .05 $ .05
________ ________ _________ ________
________ ________ _________ ________
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 and 1994
(Unaudited)
<CAPTION>
INCREASE (DECREASE) IN CASH
1995 1994
_________ _________
<S> <C> <C>
Cash flows provided by (used in)
operating activities:
Net income........................... $655,000 $728,000
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation....................... 867,000 809,000
Amortization of deferred grant
income............................ (56,000) (48,000)
Gain from sales of properties and
easements......................... (58,000) (39,000)
Deferred income taxes.............. 170,000 165,000
Changes in assets and liabilities:
Accounts receivable............... (369,000) 429,000
Materials and supplies............ (185,000) 35,000
Prepaid expenses and other........ 12,000 178,000
Accounts payable.................. 445,000 (1,386,000)
Accrued expenses.................. (71,000) 118,000
Income taxes...................... 145,000
__________ __________
Net cash provided by operations...... 1,410,000 1,134,000
__________ __________
Cash flows provided by (used in)
investing activities:
Purchase of properties and
equipment........................... (1,807,000) (1,232,000)
Proceeds from:
Sales of properties and easements... 58,000 80,000
Deferred grant income............... 62,000 328,000
__________ __________
Net cash used in investing
activities.......................... (1,687,000) (824,000)
__________ __________
Cash flows provided by (used in)
financing activities:
Net borrowings under line of credit.. 655,000
Payments of:
Long-term debt...................... (344,000) (341,000)
Dividends........................... (106,000) (103,000)
Proceeds from issuance of common
shares for stock
options exercised.................. 9,000 4,000
__________ __________
Net cash provided by (used in)
financing activities................ 214,000 (440,000)
__________ __________
Decrease in cash....................... (63,000) (130,000)
Cash, beginning of period.............. 595,000 574,000
__________ __________
Cash, end of period.................... $532,000 $444,000
__________ __________
__________ __________
Supplemental disclosures:
Cash paid during the period for:
Interest............................. $605,000 $663,000
__________ __________
__________ __________
Income taxes......................... $265,000 $124,000
__________ __________
__________ __________
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
1. In the opinion of management, the accompanying interim financial
statements contain all adjustments (consisting solely of normal
recurring adjustments) necessary to present fairly the financial
position as of June 30, 1995, the results of operations for the three
and six months ended June 30, 1995 and 1994, and cash flows for the
six months ended June 30, 1995 and 1994. Results for interim periods
may not be necessarily indicative of the results to be expected for
the year.
2. Changes in shareholders' equity:
<TABLE>
Capital in
Preferred Common excess of Retained
Stock Stock par Earnings
________ ________ ________ _________
<S> <C> <C> <C> <C>
Balance Dec. 31, 1994.... $33,000 $1,005,000 $5,046,000 $26,830,000
Issuance of 40,606 common
shares to fund the
Company's 1994 profit
sharing plan
contribution............. 20,000 315,000
Issuance of 1,711 common
shares for stock options
exercised................ 1,000 8,000
Dividends:
New preferred stock,
$5.00 per share.......... (3,000)
Common stock, $.05 per
share.................... (103,000)
Net income for the
period................... 655,000
________ ________ ________ _________
Balance June 30, 1995.... $33,000 $1,026,000 $5,369,000 $27,379,000
________ ________ ________ _________
________ ________ ________ _________
</TABLE>
<TABLE>
3. Other income:
Three Months Ended Six Months Ended
June 30 June 30
__________________ ____________________
1995 1994 1995 1994
________ ________ ________ ________
<S> <C> <C> <C> <C>
Gain from sales of
properties and
easements, net...........$ 25,000 $ 32,000 $ 58,000 $ 39,000
Rentals................... 115,000 104,000 253,000 226,000
Interest.................. 4,000 1,000 9,000 2,000
________ ________ ________ ________
$144,000 $137,000 $320,000 $267,000
________ ________ ________ ________
________ ________ ________ ________
</TABLE>
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
4. Earnings per share:
Weighted average common and common equivalent shares outstanding used
in computing earnings per share:
1995 1994
_________ _________
<S> <C> <C>
Three months ended June 30 2,106,389 2,074,466
_________ _________
_________ _________
Six months ended June 30 2,091,230 2,063,833
_________ _________
_________ _________
</TABLE>
The Company considers its $50 par "New Preferred Stock", each share
of which is convertible into 100 shares of common stock, to be common
equivalent shares for purposes of computing earnings per share. New
Preferred Stock was issued in September 1994 in accordance with the
terms of a plan of recapitalization which called for conversion of
the Company's $.50 par "Old Preferred Stock" into New Preferred in a
ratio of one share of New Preferred Stock for one hundred shares of
Old Preferred Stock.
The Company has not given effect to the outstanding options to
purchase its common stock in calculating earnings per share since the
effect of such options is not material.
5. Contingencies:
A number of lawsuits relating to casualty losses are pending against
the Company, many of which are covered by insurance subject to a
deductible. The Company has provided for its estimate of exposure to
such claims and in management's opinion additional liability, if any,
will not be material to the operations or financial position of the
Company.
The Company owns a site which is contaminated with petroleum
products. It is currently productive as a part of the Company's
double-stack intermodal yard. The site is not the subject of any
agency proceedings. Environmental specialists have indicated that
natural biodegradation of the contamination is occurring. It is not
anticipated that the costs of remediation would have a materially
adverse effect upon the Company's financial statements.
The Company has been notified by a private party and the United
States Environmental Protection Agency (EPA) that the Company is
alleged to be a potentially responsible party for a portion of the
costs of remediation of a Superfund site, reportedly due to the
impact of a 1974 incident involving a rail car. The EPA's
preliminary estimate of the total cost of the clean-up alternative it
has recommended is approximately $7 million. The Company has no
ownership interest in the site. The Company has denied
responsibility to both parties. No formal claims or proceedings
against the Company have been initiated in this matter. The Company
believes it has strong defenses in the event any such claim or
proceeding is forthcoming. The Company is currently engaged in
discussions with EPA and the private party and expects to reach an
amicable resolution which would not have a materially adverse effect
upon the Company's financial statements.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
6. Subsequent event:
In July 1995 the Company received a commitment from its principal
bank to increase its revolving line of credit from $1,250,000 to
$1,500,000 and to reduce the interest rate on borrowings under this
line of credit from the bank's prime rate ("prime") plus 3/4% to
prime plus 1/2%. Borrowings under this line continue to be due on
demand and are secured by the Company's accounts receivable.
The Company also received a commitment from its principal bank for a
five year term loan in the amount of $1,800,000. The loan will be
payable in monthly principal payments of $21,000 plus interest at
prime plus 3/4% with the remaining principal balance being payable at
the end of the five year term. The term loan will be collateralized
by a mortgage on the Company's Corporate headquarters building in
Worcester, Mass, as well as liens on its inventory of materials and
supplies and certain of its track structure.
The Company intends to apply all of the proceeds from this term note
to reduce the outstanding principal balance of its long term mortgage
note payable to Capital Properties, Inc. ("CPI"), with which the
Company has a common controlling shareholder. The Company has
reached an agreement with CPI whereby CPI will reduce the annual
interest rate on the remaining balance of its long-term note from 12%
to 10% upon receipt of the $1,800,000 principal payment from the
Company.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As detailed in the accompanying statements of cash flows, the Company
generated $1,410,000 of cash from operations during the six months
ended June 30, 1995. On an overall basis, however, the Company's total
cash decreased by $63,000 during the six month period. The principal
uses of cash during the period were for additions to properties and
equipment, principal payments on long term debt and payment of
dividends. Deferred grant income of $172,000, recorded during the
period, was utilized to fund certain of the additions to properties.
Expenditures for properties and equipment include $576,000 for the
Company's deep-water pier project, $719,000 of capitalized track
structure improvements, $480,000 of equipment additions and $32,000 of
building improvements.
As disclosed in Note 6 to the accompanying financial statements the
Company obtained a commitment from its principal bank in July 1995 to
increase its short term revolving line of credit from $1,250,000 to
$1,500,000. The effect of this will be to increase the Company's
working capital availability by $250,000. Loans are drawn against this
line and payments of principal are made from time to time depending
upon cash balances and requirements. Loans in the amount of $775,000
were outstanding under this line as of June 30, 1995.
As further disclosed in Note 6 the Company has also obtained a
commitment for a five year term loan in the amount of $1,800,000. This
loan will have an adjustable interest rate equal to the bank's prime
rate plus 3/4% (currently 9 1/2%). The proceeds from this loan will be
utilized to prepay a portion of the outstanding principal balance on
the Company's 12% long-term mortgage note payable to Capital
Properties, Inc ("CPI"). The Company and CPI have a common,
controlling shareholder. CPI has agreed to reduce the interest rate on
the remaining balance of its long term mortgage note (approximately
$4,660,000) from 12% to 10% per year upon receipt of this prepayment.
If this debt restructuring were to become effective as of August 31,
1995 and if there is no change in the current prime rate the effect of
this transaction would be to reduce the Company's interest expense for
the remainder of 1995 by $47,000 and by $150,000 for 1996. The total
cash outlay required for payment of interest and principal on these
loans would increase by $26,000 for the remainder of 1995 and $62,000
for 1996.
In management's opinion, the Company will be able to generate
sufficient cash from operations during the remainder of the year to
enable it to meet its operating expense, debt service and capital
expenditure requirements.
Results of Operations
Operating revenues for the six months ended June 30, 1995 increased by
4% over 1994. This increase results from a 13% increase in
conventional traffic volume partially offset by a 5% decrease in the
average revenue per conventional carload handled and a 34% decrease in
net revenue from containers on flatcars from $1,110,000 in 1994 to
$735,000 in 1995. The volume of containers handled decreased by 16%
between periods and the average net revenue received per container
decreased by 22%.
Operating revenues for the quarter ended June 30, 1995 increased by 2%
over the second quarter of 1994. This increase is the net result of a
9% increase in conventional traffic volume offset, in part by a 3%
decrease in the average revenue per conventional carload handled and a
38% decrease in net container revenue from $611,000 in 1994 to $379,000
in 1995. The volume of containers handled decreased by 20% between
periods and the average net revenue received per container decreased by
23%.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The increase in conventional traffic volume for the three and six month
periods was largely due to an increase in the number of carloads of
construction aggregates handled. Since such commodities command
relatively low revenues on a per carload basis, the large increase in
this traffic volume accounts for the reduction in the average revenue
received per conventional carload. The decrease in the volume of
containers handled results from the loss of the Company's largest
containership line customer in July 1994. The loss in container
traffic attributable to that customer has been offset, to a degree, by
increased traffic volumes from remaining customers. The decrease in
the net revenue per container, between periods, is attributable to a
change in the mix of containers and rate adjustments necessitated by
competitive factors within the industry.
Total operating expenses for the three and six month periods ended
June 30, 1995 increased by 7% over the comparable 1994 periods. Total
operating expenses expressed as a percentage of operating revenues
increased from 84% for the six months ended June 30, 1994 to 87% in
1995 and from 78% for the second quarter of 1994 to 81% in 1995. The
increase in operating expenses results principally from costs incurred
in handling the increased volume of conventional traffic and from
higher levels of maintenance expenses.
Interest expense for the three and six month periods ended June 30,
1995 decreased by 8% from the comparable periods in 1994 primarily as a
result of lower levels of long and short term borrowings.
<PAGE>
PART II
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on April 26, 1995.
Of the 2,001,137 shares of common stock entitled to vote,
1,630,024 shares were present, in person or by proxy. Of the
653 shares of preferred stock entitled to vote, 519 shares were
present, in person or by proxy.
All directors of the Company are elected on an annual basis and
the following were so elected at this Annual Meeting:
Ronald P. Chrzanowski, Robert H. Eder and William J. LeDoux were
elected Common Stock Directors. Each director received
1,624,200 affirmative votes and 5,824 negative votes of common
shares.
John H. Cronin, Robert J. Easton, J. Joseph Garrahy, Orville R.
Harrold, John J. Healy, and Francis M. White were elected
Preferred Stock Directors. Each director received 519
affirmative votes and no negative votes of preferred shares.
A resolution was presented for the appointment of Deloitte &
Touche LLP as independent auditors of the accounts of the Company
for 1995. The resolution received 1,628,784 affirmative votes
and 280 negative votes of common shares with 960 common shares
abstaining. The resolution received 519 affirmative votes and
no negative votes of preferred shares.
Item 6. Exhibits and Reports on Form 8-K
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PROVIDENCE AND WORCESTER
RAILROAD COMPANY
By:Orville R. Harrold, President
Orville R. Harrold, President
By:Robert J. Easton
Robert J. Easton
Treasurer and Principal
Financial Officer
DATED: August 11, 1995
<TABLE> <S> <C>
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 532
<SECURITIES> 0
<RECEIVABLES> 2395
<ALLOWANCES> 125
<INVENTORY> 848
<CURRENT-ASSETS> 4425
<PP&E> 80832
<DEPRECIATION> 22422
<TOTAL-ASSETS> 62835
<CURRENT-LIABILITIES> 6179
<BONDS> 10135
<COMMON> 1026
0
33
<OTHER-SE> 32748
<TOTAL-LIABILITY-AND-EQUITY> 62835
<SALES> 0
<TOTAL-REVENUES> 10456
<CGS> 0
<TOTAL-COSTS> 8799
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 607
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<NET-INCOME> 655
<EPS-PRIMARY> .31
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</TABLE>
